- Syria tensions rise as US debates military action
- Chinese exports rise unexpectedly
- Osborne says UK turned a corner
- Spain's economy to grow again, says broker
FTSE 100: -0.29%
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FTSE MIBL 1.16%
IBEX 35: -0.20%
Stoxx 6000: -0.08%
European equities were mixed as the Syrian turmoil continued and as a report showed better than expected Chinese exports.
US President Barack Obama is making his final push to convince lawmakers to support military action against the Syrian government.
The Senate is expected to vote on the resolution by the end of this week before the House begins debating on the situation next week.
The US has urged Syrian President Bashar al Assad to hand over his chemical weapons after allegedly using them against civilians on August 21st.
US Secretary of State John Kerry on Monday said the US was "not going to war" with Syria but was planning a "very limited, very targeted, very short-term" strike after arriving in London for talks with British Foreign Secretary William Hague.
Kerry's remarks came as Russian Foreign Minister Sergei Lavrov warned Western leaders that any military strikes would cause an "outburst of terrorism" in the region.
Russian President Vladimir Putin said he would back Syria against any strike during the G20 summit last week after which Assad thanked the leader.
"Traders are fearful of the implications of the military intervention by the US, particularly after Putin warned that a Western strike could be met with retaliation as he continues to support Syria financially and strategically," said Ishaq Siddiqi, Market Strategist at ETX Capital.
On a brighter note for the market, Chinese exports rose 7.2% in August from a year earlier beating the 5.5% estimate, according to the General Administration of Customs. The data pointed to signs the world's second largest economy may be recovering from its recent slump.
Another positive from China was an increase in consumer prices rising by 2.6%, in line with expectations.
"This is still well below the central bank's upper limit of 3.5%, which reduces the odds of monetary tightening by the People's Bank of China in the short term, while giving the government room to continue with its targeted stimulus efforts without being concerned about the inflationary impact," said Craig Erlam, Market Analyst at Alpari UK.
US investors support European market
US traders have invested $65bn in the European market in the first half of the year, the most in 36 years, according to research from Goldman Sach's European strategy team.
The investments, which come from pension funds and other US groups, show confidence in Europe's recovery following a batch of positive economic data.
Chief Investment Officer of international equity at Goldman Sachs Asset Management, Eddie Perkins, said: "The economic story makes Europe a good bet. We expect European equities to keep rising as the continent recovers."
The European Central Bank last week improved its outlook for the Eurozone economy this year. The Bank expects the region to shrink 0.4% compared to its previous forecast in June of a 0.6% contraction.
In Spain, the economy looks set to grow again, according to Morgan Stanley which predicts gross domestic product of around 1% on average in 2014 to 2015 as exports pick up.
"But whether a subpar recovery turns into a more sustained upswing hangs on where Spain is in the process of deleveraging, rebalancing and reforming," the broker said. "There's more to do, but we're more constructive than market expectations on Spain's ability to set itself apart from the rest of the periphery in the medium term."
Osborne says UK economy turning corner
Chancellor George Osborne said the UK economy is turning a corner, citing signs of a "tentative balanced, broad based and sustainable recovery".
He pointed to recent positive economic data as he said the country was in the early stages of a rebound.
Revised gross domestic product figures showed the UK economy grew by 0.7% in the second quarter of the year.
"Of course, many risks remain," Osborne said. "These are still the early stages of recovery. But we mustn't go back to square one. We mustn't lose what the British people have achieved."
BG Group, GSK
BG Group slumped after cutting its 2014 production forecast due to unrest in Egypt, a delay in first production from the Knarr project in Norway and lower volumes from the US.
GlaxoSmithKline's stock fell as Suntory Beverage & Food agreed to buy the company's drink brands Lucozade and Ribena for £1.3bn.
Munich Re advanced after the Bank of America upgraded the world's biggest reinsurer from 'neutral' to 'buy'.
E.On slid after Bank of America downgraded the German utility's shares
to 'underperform' from 'neutral'.
Christian Dior jumped as the French luxury goods marker announced a forward purchase agreement with an authorised financial intermediary to buy up to 550,000 of its own shares.
Brent crude declines
Brent crude futures dropped $1.212 to $114.730 per barrel on the ICE.
The euro climbed 0.55% to the 1.3250 US dollar.